In most startups, the HR function starts out as tactical. You have to get people hired and paid, and while you might have a founder or early-stage employee who can do these things, often these tasks are outsourced to a PEO. As the company grows, it probably in-sources payroll and benefits, hires a recruiter, and maybe has an HR Manager who handles the function. Depending on the number of roles you see being filled, the degree of specialization, or a host of other factors, having an in-house team to handle the tactical aspects of HR makes a lot of sense. At some point, you may need to take another step and hire a Chief People Officer.
One sign that it’s time to hire a Chief People Officer is if you feel you’re the driver of company values, that not only are you the one talking about values and viewing the company and interactions with that lens, but you’re the only one who cares about the core values. If your HR function is only focused on the tactical aspects of the role and not on how values drive the company, you’ll need to consider a full-time People Officer, because focusing only on tactical functions won’t help your company scale.
If you’re spending too much of your own time training managers and leaders or working on interpersonal dynamics on your leadership team, this is another sign that it’s time to consider a Chief People Officer. What’s the right amount of time? If you’re a CEO, I think you should be more like a consultant on these tasks, rather than the driving force behind them. If a large portion of your day or week is filled with people ops activities, it’s time to think about hiring someone.
A third sign that it’s time to hire a Chief People Officer is if you get stuck when your board asks about your talent strategy. They might ask for details about improving diversity, retention, and engagement metrics, or about average employee salary, and you don’t have a great answer. While it’s acceptable—occasionally—to not know the strategy at a detailed level for a particular part of your business, if you get asked a question by your board and haven’t the faintest idea how to get an answer, that's a good sign that you should consider bringing in a full-time Chief People Officer.
A fractional Chief People Officer could be a great option if you’re adding this role for the first time. especially if you have a very competent HR manager or a director who has strategic inclinations but lacks experience operating as a strategic executive, a fractional executive could be helpful, providing the support your leader needs to “level up.” Or, if you need someone to play more of a consigliere or guiding role to your executive team but don’t want to engage a coach—and your day-to-day HR leader is getting the job done but is too junior to facilitate workshops for the senior team—a fractional executive could offer the senior experience you need. Finally, if you have a very junior HR function or are insourcing the role for the first time and need support setting the whole function up from scratch, a fractional or project-based executive would be helpful.
As a startup, it’s easy to focus on the day-to-day operational details of the People Ops team, because those things—payroll, benefits, hiring, onboarding—are tangible and have metrics associated with them. But these factors won’t help you scale. If you want to scale your company, you’ll need to have someone in your organization who cares deeply about your values. They need to be passionate about helping individual contributors and leaders connect their work to company values. A Chief People Officer will be able to step in and be a leader to the leadership team; after all, companies are built into greatness by people, so this position is pivotal to your company’s success.
-Matt Blumberg, July 20, 2023.